Fidelity Research on Generation X / Y Shows That Financial Intentions and Actions...

Fidelity Research on Generation X / Y Shows That Financial Intentions and Actions Are Often in Conflict

While Most Don't Equate Success with Wealth, Money Named as Their
Biggest Concern
BOSTON--(Business Wire)--
Fidelity Investments today released new research on Generation X
and Y(1), whose combined population will represent 60 percent of the
U.S. workforce by 2010(2). The research indicates that when it comes
to how both generations view and make decisions about money, they are
often conflicted between their intentions and actions.

The findings were the culmination of a four-month, multi-tiered
ethnographic and quantitative research study consisting of about 1,200
adults between the ages of 20 to 40 years(3). The research revealed
five areas of conflict for both generations around career decisions,
savings perceptions, Internet adoption, financial guidance and
workplace savings plan usage.

1) Money is the top concern, but work/life balance drives career
choices.

-- When asked about what keeps them up at night, nearly eight out
of ten respondents (77 percent of Gen X, 74 percent of Gen Y)
named money as their biggest concern, well above concern over
family relationships or healthcare.

-- However, money doesn't drive their career choices. Both Gen X
and Y agree that career decisions are primarily driven by
their quest for work/life balance (70 percent Gen Y, 63
percent Gen X).

2) Gen X/Y agree that saving for retirement is a goal, but other
financial priorities and managing debt are more crucial.

-- Fifty percent of Gen X/Y (55 percent Gen X, 44 percent Gen Y)
list saving for retirement as a current obligation or goal.

-- However, more than half (51 percent Gen X/Y) indicate other
financial priorities prevent them from saving for retirement.
When compared to saving for retirement, managing everyday
finances, making mortgage payments and managing credit card
debt all rank higher as crucial goals for both Gen X/Y.

-- For Gen Y, saving for retirement is even less crucial, with
making car payments, paying off school loans and saving for a
home also ranking higher.

"Debt prevents saving in older generations as well, but it's
especially a challenge for Gen X and Y," said Pamela Norley, executive
vice president, Fidelity Consulting Group. "Our research revealed that
younger generations are more likely to use credit than save for
short-term purchases, which results in an ongoing struggle with debt
management."

3) More than half couldn't say they were making good financial
decisions, yet a significant number were not seeking any guidance.

-- Most Gen X and Y don't feel confident that they are making
solid financial decisions. Sixty-two percent of Gen X and 57
percent of Gen Y couldn't say they were making good decisions
about their finances.

-- Parents are the No. 1 resource that both generations turn to
for help and guidance on financial matters (43 percent Gen Y,
28 percent Gen X).

-- However, nearly 1 in 5 didn't turn to any resource for help on
financial matters. In fact, when changing jobs, 41 percent
didn't seek any guidance regarding their workplace retirement
assets. Of this group, 56 percent cashed out of their
workplace savings plans.

4) A workplace retirement plan (e.g. 401(k), 403(b)) is their No.
1 tool for savings outside of their banking account, yet four out of
10 are cashing out assets from their workplace savings plan when
changing jobs.

-- When utilizing savings vehicles beyond their everyday savings
account, their workplace savings plan (54 percent Gen X, 46
percent Gen Y) is No. 1, far outpacing IRAs, CDs and
stock/bonds/mutual funds.

-- Fifty-two percent of Gen Y (with a workplace retirement plan)
anticipate leaving their job within five years, with 31
percent of Gen X making the same statement.

-- Yet when changing jobs, 40 percent of Gen X/Y cash out of
their workplace retirement plan.

"For many young people, workplace savings plans are often their
very first experience with investing," said Scott B. David, president
of retirement services, Fidelity Investments. "While it's encouraging
to see that more than half are saving through their workplace plan,
the cash out rate is concerning. Employers and service providers need
to work together to help this generation understand the long-term
implications of cashing out and options to help their money to
potentially continue to grow."

5) Being able to do all banking online is important, but
surprisingly many younger investors still want a brick and mortar
presence.

-- Seventy-two percent of Gen X and 78 percent of Gen Y state
that being able to do all banking online is important to them.
In fact, 49 percent of Gen X/Y consumers are spending at least
one hour a week paying bills or banking, while fewer spend the
same time on social networks (39 percent) or blogging (14
percent).

-- But even more want a local branch nearby to rely on, with 87
percent of Gen X/Y saying it's important.

Innovative Approach to Generation X/Y Research

Fidelity used a unique research approach to understand the needs
of Generation X and Y. The ethnographic research was conducted by CMI
and consisted of 40 adults between the ages of 21-35 across four
geographic markets. The research encompassed blogging assignments,
in-home interviews and focus groups. The results from the ethnographic
work informed a broader quantitative research study conducted by
Burke, Inc. which consisted of about 1,200 financial decision makers
(age 20-40) in the U.S. with at least $15,000 in annual income. Data
for Fidelity's Generation X/Y Research was collected between October
2007 and January 2008.

"These generations communicate and learn so differently than
previous investors that we had to look at a completely different
approach to understand their mindset and behavior," said Norley. "This
research will help inform product development in the future to ensure
relevance with these investors."

Fidelity currently provides workplace and retail products, from
401(k) plans to IRAs, to approximately 5.6 million Gen X and Gen Y
investors.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of
financial services, with custodied assets of more than $3.2 trillion,
including managed assets of $1.5 trillion as of July 31, 2008.
Fidelity offers investment management, retirement planning, brokerage,
and human resources and benefits outsourcing services to 24 million
individuals and institutions as well as through 5,500 financial
intermediary firms. The firm is the largest mutual fund company in the
United States, the No. 1 provider of workplace retirement savings
plans, the largest mutual fund supermarket and a leading online
brokerage firm. For more information about Fidelity Investments, visit
www.fidelity.com.

Burke, Inc. and CMI are not affiliated with Fidelity Investments.

Fidelity Brokerage Services LLC, Member NYSE, SIPC

503545.1.0

(1) Generation X born between 1967-1975, Generation Y born between
1976-1987

(2) Bureau of Labor Statistics, Monthly Labor Review, May 2002

(3) Research conducted by CMI and Burke, Inc. for Fidelity
Investments, October 2007-January 2008

Fidelity Investments
Corporate Communications, 617-563-5800

Copyright Business Wire 2008